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CPL
CPL
CPL - Capital - Unaudited Results For The Six Months Ended 30 June 2009
Capital Property Fund
Share code: CPL
ISIN: ZAE000001731
("Capital" or "The Fund" or "The Group")
(A portfolio in Capital Property Trust Scheme, a Collective Investment Scheme
in Property established in terms of the Collective Investment Schemes Control
Act, No 45 of 2002 managed by -
Property Fund Managers Limited ("PFM"))
(Incorporated in the Republic of South Africa)
(Registration No. 1980/009531/06)
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2009
Directors` commentary
1. Distributable earnings
Capital`s distribution per unit for the interim period ended 30 June 2009
amounted to 25,72 cents. This represents an increase of 14,67% over the 22,43
cents for the interim period ended 30 June 2008.
2. Commentary on results
These results are attributable to the strategy of selling poorer quality
properties at the top of the property cycle and investing in well located
industrial and commercial properties with strong tenant covenants. Firm
control of arrears and vacancies, together with upward rental reversions,
contributed to the strong performance. Lower demand for industrial and
commercial space has, however, resulted in the vacancies in the portfolio
increasing from 2,7% to 3,6%.
Capital`s gearing increased to 22,5% following the acquisition of an
additional 31 169 000 units in Pangbourne Properties Limited ("Pangbourne")
at an average price of R13,85 and it now holds 43 169 000 units, representing
9,8% of Pangbourne`s units in issue. Capital`s relatively low gearing places
it in a strong position to continue to take advantage of any opportunities
which may arise.
3. Property acquisitions and developments
3.1 N1 Business Park (20% interest)
Two warehouse facilities of 4 600m2 and 7 821m2 were completed and let to
Landis+Gyr (initial yield 10,3%) and Digistics (initial yield 10,1%)
respectively. The joint venture consortium will not be undertaking any
speculative developments until market conditions improve.
3.2 Surprise Park
A 3 514m2 industrial development built on unutilised land in Surprise Park,
Pinetown, was completed in April 2009. The market for industrial property has
deteriorated in the Pinetown node and the property is currently vacant.
Management is confident that the property will be let by year end.
3.3 Resilient portfolio
Capital acquired Isando Business Park, City Deep Industrial Park, Chemserve
Spartan and a 25% stake in Montague Business Park (vacant land) from
Resilient Property Income Fund Limited ("Resilient") for R611,5 million with
effect from 1 August 2009. The purchase price is payable in Capital units to
be issued at R6,20 per unit, excluding the distribution for the period ended
30 June 2009. The acquisition became unconditional when Capital unitholders
approved the transaction at a general meeting of unitholders on 3 August
2009. The initial yield on the developed properties is 9,5%.
The acquisition is in line with Capital`s strategy of investing in quality
industrial parks with corporate tenants located in prime nodes.
3.4 Mahogany Road
Capital acquired Mahogany Road, a 16 209m2 industrial park in Mahogany Ridge,
for R65 million at an initial yield of 9,2%. Tenants include Freddy Hirsh and
LG Electronics.
4. Disposals
4.1 Properties sold
Capital sold the following non-core properties during the interim period:
Net Book
proceeds value Transfer
Property name (R` million) (R` million) Yield date
Hendrik Verwoerd
Road Centurion 20,2 19,7 9,9% 8 June 2009
87 Bofors Circle
Epping 25,5 16,8 3,8% Pending
17 Brands Hatch
Close 5,0 3,4 6,8% Pending
138 Old Main Road Pinetown, 31 Indianapolis Street (Unit 3) and 349 Roan
Crescent, properties which were held for sale at December 2008, were
transferred during the interim period.
4.2 Properties held for sale
Capital has in principle agreed to the sale of 14 properties valued at R321,4
million to a new property fund, Fortress Income Fund Limited ("Fortress"),
planned to list on the JSE in October 2009. Capital`s projected exit yield is
12,1%. Fortress will list A and B linked units with the A units entitled to a
predetermined initial yield, escalating at a fixed annual percentage. The A
units will have preference over the B units. Similar structures have in the
past been well received by the market.
5. Prospects
Further deterioration in market conditions is anticipated that will limit
rental growth and increase vacancies from current levels. Capital`s growth
prospects nonetheless remain strong and the board anticipates that growth in
distributions of between 14% and 16% will be achieved for the 2009 financial
year. This forecast has not been reviewed or reported on by the Fund`s
auditors.
By order of the board
Andrew Teixeira Rual Bornman
Managing director Financial director
5 August 2009
Johannesburg
Consolidated balance sheet
Unaudited Audited Unaudited
30 Jun 2009 31 Dec 2008 30 Jun 2008
R`000 R`000 R`000
ASSETS
Non-current assets 5 030 845 4 850 819 3 225 583
Investment property 4 218 541 4 459 286 3 019 443
Straight-lining of rental
income adjustment 61 785 58 107 50 782
Investment property under
development 39 752 41 703 31 265
Investments 591 415 172 800 -
Investment in associate
company 119 352 118 923 124 093
Current assets 384 421 107 249 13 128
Investment property held
for sale 353 920 50 692 -
Straight-lining of rental
income adjustment 7 417 610 -
Trade and other
receivables 22 892 54 941 12 991
Cash and cash equivalents 192 1 006 137
Total assets 5 415 266 4 958 068 3 238 711
EQUITY AND LIABILITIES
Capital of Fund 3 827 092 3 772 738 2 827 215
Trust capital 2 039 442 1 981 763 1 382 567
Non-distributable reserves 1 787 650 1 790 975 1 444 648
Retained earnings - - -
Total liabilities 1 588 174 1 185 330 411 496
Non-current liabilities 1 286 539 798 702 239 699
Interest-bearing
borrowings 1 215 110 731 615 186 053
Deferred tax 71 429 67 087 53 646
Current liabilities 301 635 386 628 171 797
Trade and other payables 73 913 171 371 41 385
Interest-bearing
borrowings 53 666 53 531 -
Unitholders for
distribution 159 194 154 003 113 003
Bank overdraft 14 862 7 723 17 409
Total equity and
liabilities 5 415 266 4 958 068 3 238 711
Consolidated income statement
Unaudited Audited Unaudited
30 Jun 2009 31 Dec 2008 30 Jun 2008
R`000 R`000 R`000
Net rental and related
income 207 699 260 213 131 241
Recoveries and contractual
rental income 280 126 361 113 172 129
Straight-lining of rental
income adjustment 10 485 (7 555) 4 475
Rental income 290 611 353 558 176 604
Property operating
expenses (82 912) (93 345) (45 363)
Distributable income from
investments 17 336 1 831 -
Profit/(loss) on disposal
of investment property 3 142 (2 389) 513
Fair value (loss)/gain on
investments and
investment property (7 367) 379 432 (4 475)
Fair value gain on
investment property 27 759 353 854 -
Fair value adjustment
resulting from
straight-lining of rental
income (10 485) 7 555 (4 475)
Fair value (loss)/gain on
investments (24 641) 18 023 -
Administrative expenses (13 376) (17 025) (8 445)
Share of post acquisition
reserves from associate 5 390 6 639 857
Distributable income from
associate 4 961 10 711 4 929
Profit/(loss) from
associate 429 (4 072) (4 072)
Profit before net finance
costs 212 824 628 701 119 691
Net finance costs (52 493) (3 383) (8 144)
Finance income 1 268 27 027 2 103
Fair value adjustment on
interest rate derivatives - - 2 103
Interest on units issued
cum distribution 1 268 27 027 -
Finance costs (53 761) (30 410) (10 247)
Interest on borrowings (48 209) (23 306) (10 247)
Fair value adjustment on
interest
rate derivatives (5 552) (7 104) -
Profit before income tax 160 331 625 318 111 547
Income tax (4 462) (11 525) 1 916
Profit for the period
attributable to
equity holders 155 869 613 793 113 463
Basic earnings per unit
(cents)* 25,18 110,32 22,52
Headline earnings per unit
(cents)* 26,59 44,62 22,93
*The Fund has no dilutionary instruments in issue.
Reconciliation of profit for the period to headline earnings and
distributable income
Unaudited Audited Unaudited
30 Jun 2009 31 Dec 30 Jun 2008
2008
R`000 R`000 R`000
Basic earnings 155 869 613 793 113 463
Adjusted for: 8 687 (365 518) 2 046
- (Profit)/loss on disposal
of investment property (3 142) 2 389 (513)
- Fair value gain on
investment property (27 759) (353 854) -
- Fair value adjustment
resulting from straight-
lining of rental income 10 485 (7 555) 4 475
- Fair value loss/(gain)on
investments 24 641 (18 023) -
- Income tax 4 462 11 525 (1 916)
Headline earnings 164 556 248 275 115 509
Reconciliation of profit for
the period to amount
available for distribution
Profit for the period 155 869 613 793 113 463
Straight-lining of rental
income adjustment (10 485) 7 555 (4 475)
(Profit)/loss on disposal of
investment property (3 142) 2 389 (513)
Fair value gain on
investment property (27 759) (353 854) -
Fair value adjustment
resulting from
straight-lining of rental
income 10 485 (7 555) 4 475
Fair value loss/(gain) on
investments 24 641 (18 023) -
Share of post acquisition
reserves from associate (429) 4 072 4 072
Fair value adjustment on
interest rate derivatives 5 552 7 104 (2 103)
Income tax 4 462 11 525 (1 916)
Distributable income 159 194 267 006 113 003
Distribution declared 159 194 267 006 113 003
Interim 159 194 113 003 113 003
Final - 154 003 -
Abridged consolidated cash flow statement
Unaudited Audited Unaudited
30 Jun 2009 31 Dec 2008 30 Jun 2008
R`000 R`000 R`000
Net cash (outflow)/inflow
from operating activities (65 435) 44 828 (5 156)
Cash (outflow)/inflow from
investing activities (483 827) (160 947) 17 100
Cash inflow/(outflow) from
financing activities 541 309 128 180 (10 438)
(Decrease)/increase in cash
and cash equivalents (7 953) 12 061 1 506
Cash and cash equivalents
at the beginning of
the period (6 717) (18 778) (18 778)
Cash and cash equivalents
at the end of the period (14 670) (6 717) (17 272)
Consolidated statement of changes in unitholders` interest
Non-
Trust distributable Retained
capital reserves earnings Total
R`000 R`000 R`000 R`000
Balance at
31 December 2007 1 382 567 1 444 188 - 2 826 755
Profit for the
period 113 463 113 463
Transfer to non-
distributable
reserves 460 (460) -
Distribution (113 003) (113 003)
Balance at
30 June 2008 1 382 567 1 444 648 - 2 827 215
Profit for the
period 500 330 500 330
Issue of units 599 196 599 196
Transfer to non-
distributable
reserves 346 327 (346 327) -
Distribution (154 003) (154 003)
Balance at
31 December 2008 1 981 763 1 790 975 - 3 772 738
Profit for the
period 155 869 155 869
Issue of units
10 000 000 units
on 1 April 2009
57 679 57 679
Transfer to non-
distributable
reserves (3 325) 3 325 -
Distribution (159 194) (159 194)
Balance at
30 June 2009 2 039 442 1 787 650 - 3 827 092
Preparation and accounting policies
The summarised consolidated interim financial statements have been prepared
in accordance with the recognition and measurement criteria of International
Financial Reporting Standards (IFRS) and the preparation and disclosure
requirements of IAS 34 and the Collective Investments Schemes Control Act
(Act 45 of 2002).
The accounting policies are consistent with those of the prior periods. The
interim financial statements have not been audited or reviewed by the Fund`s
auditors.
The fair value gain on investment property relates to investment property
held for sale. It is the Fund`s policy to revalue investment property
annually.
Summary of financial performance
30 Jun 2009 31 Dec 2008 30 Jun 2008 31 Dec 2007
Distribution
per unit
(cents) 25,72 25,29 22,43 21,79
Units in
issue 618 949 027 608 949 027 503 801 158 503 801 158
Net asset
value R6,18 R6,20 R5,61 R5,61
Gearing
ratio* 22,5% 20,8% 10,7% 10,2%
* The gearing ratio is calculated by dividing the total gearing (interest-
bearing borrowings plus current liabilities less current assets) by non-
current assets.
Gearing
Nominal amount
Swap maturity R`000 Rate
Oct 2009 50 000 9,22%
May 2010 45 600 8,67%
Oct 2010 50 000 9,19%
Feb 2011 100 000 7,85%
May 2011 100 000 7,68%
Dec 2011 50 000 8,29%
Dec 2011 50 000 8,53%
Feb 2012 100 000 8,04%
Feb 2013 100 000 8,18%
Oct 2013 50 000 9,47%
May 2014 50 000 8,67%
May 2014 100 000 8,60%
845 600 8,40%
Fixed rate borrowings
Jul 2012 144 000 10,30%
Jul 2012 218 000 10,49%
362 000
Total hedged borrowings 1 207 600
Variable rate borrowings (75 276)
Total gearing 1 132 324
Property portfolio summary
Unaudited
30 Jun 2009 Number of
R`000 properties
Movement in investment property
Carrying value at 31 December 2008 4 568 695 112
Additions 65 000 1
Disposals (gross) (39 890) (3)
Capital expenditure 5 499
Transfer from development property 15 055
Fair value adjustment 27 759
Amortised letting commission and tenant
installation (455)
Carrying value at 30 June 2009 4 641 663 110
Movement in investment property under
development
Carrying value at 31 December 2008 41 703
Transfer to investment property (15 055)
Cost capitalised 11 118
Interest capitalised 1 986
Carrying value at 30 June 2009 39 752
Total investment property at
30 June 2009 4 681 415 110
Listed equity investments
Unaudited
30 Jun 2009
Pangbourne Properties New Europe Property
Limited Investments plc
Linked units/shares 43 169 000 6 155 000
Value (R`000) R591 415 R138 488*
*This represents the market value at 30 June 2009. The investment has been
equity accounted.
Sectoral split
GLA Book value
Commercial 29% 49%
Industrial 61% 38%
Retail 10% 13%
100% 100%
Lease expiry profile
Rental
GLA income
Vacant 3,6% -
Dec 2009 13,3% 12,8%
Dec 2010 26,2% 27,0%
Dec 2011 19,8% 21,8%
Dec 2012 13,3% 16,5%
Dec 2013 9,6% 7,4%
Dec 2014 6,9% 8,1%
> Dec 2014 7,3% 6,4%
100% 100%
Segmental analysis
Unaudited Audited Unaudited
30 Jun 2009 31 Dec 2008 30 Jun 2008
R`000 R`000 R`000
Segmental revenue - rental
income
Retail 46 392 52 677 25 799
Commercial 141 539 144 222 76 318
Industrial 102 680 156 659 74 487
Total 290 611 353 558 176 604
Profit for the period
Retail 34 503 35 642 18 887
Commercial 97 978 197 769 55 926
Industrial 95 634 286 185 51 953
Corporate (72 246) 94 197 (13 303)
Total 155 869 613 793 113 463
Capital commitments
Unaudited Audited Unaudited
30 Jun 2009 31 Dec 2008 30 Jun 2008
R`000 R`000 R`000
Authorised and contracted 616 538 87 197 25 119
Authorised and not yet
contracted 43 336 52 254 72 542
659 874 139 451 97 661
Profit distribution
Notice is hereby given that a cash distribution of 25,72 cents interest per
unit, being number 52 for Capital Property Fund, has been declared in respect
of the period 1 January 2009 to 30 June 2009 and is payable to the
unitholders recorded in the books of Capital at the close of business on the
record date, Friday, 28 August 2009. Unitholders are advised that the last
day to trade cum distribution will be Friday, 21 August 2009. The units will
trade ex distribution as from Monday, 24 August 2009. Payment will be made on
Monday, 31 August 2009. Unit certificates may not be dematerialised or
rematerialised during the period 24 August 2009 to 28 August 2009, both days
inclusive.
Registered office 4th Floor, Rivonia Village, Rivonia Boulevard, Rivonia,
2191 (PO Box 2555, Rivonia, 2128)
Transfer secretaries Link Market Services South Africa (Proprietary) Limited,
16th Floor, 11 Diagonal Street, Johannesburg, 2001
(PO Box 4844, Johannesburg, 2000)
Sponsor Java Capital (Proprietary) Limited
Company secretary Kenneth Khumalo
Directors Willy Ross (chairman)*, Andrew Teixeira (managing director), Rual
Bornman, Rowland Chute*, Jorge da Costa* (alternate: Stefano Contardo), Des
de Beer, Andries de Lange, Protas Phili*, Barry Stuhler#, Tshiamo Vilakazi*,
Tracey Visser
*Independent non-executive director
#Non-independent non-executive director
Date: 06/08/2009 11:06:01 Produced by the JSE SENS Department.
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